麦格理-印度-宏观经济-美元与卢比：横盘整理

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1、INDIAIndiaEconomicsDollarweaknesssupportingrupeeUS$/INR:MovingsidewaysUStradeweightedindex,IndexJul2011=10070RupeehasremainedsteadybutunderperformedinthecontextofEM135US$/INR,RScurrencies:TheINRhasremainedlargelysteadyin2018YTD,movingonly125600.2%aftergaining6.4%in2017.Whileatthemarginmacrostabi

2、lityconcernshaverisenasreflectedbyhigherinflation,awidertradedeficitandsteadily115elevatedoilprices,aweakerUSDhascometotherescueoftheINR.50105HowevertheINRhasunderperformedinthecontextofEMcurrencies.95402018tobemarkedbyatrendofdollarweakness…:Ourglobalteaml-11expectsthedollartoremainonweakfootin

3、gin2018(seeTaxReformWillNotn-12ay-13pr-14ar-15eb-16n-17c-17JuJuMAMFJaDeStopTheDollarBearMarket...-“AmericaFirst”=weakerGreenback).AsSource:CEIC,Bloomberg,MacquarieResearch,Januarysuchwebelievethatdollarweaknessandsupportfromcapitalflowswillkeep2018theINRsupported.…andconcernsonmacrostabilityatth

4、emargin:However,atthesameRupeehasunderperformedotherEMcurrenciesin2018YTDtime,weexpectmacrostabilityindicatorstowidenatthemarginin2018:Wideningcurrentaccountdeficit:WeexpectthecurrentaccountPerformanceinCY2018YTD6%deficittowidento~2.3%ofGDPinFY19from1.6%ofGDPinFY18e.4.8%5%3.9%Basicbalancenarrow

5、ing(CAD+netFDI):Thebasicbalancehas4%3.5%ppreciationa2.6%2.7%beennarrowinglargelyduetoahighercurrentaccountdeficit.Ona3%2.5%1.7%trailing4-quarterbasis,thebasicbalancehasnarrowedto0%ofGDP2%1.3%vs.theneartermsurplusof1.4%ofGDPinSep-16.Weexpectthe1%0.2%basicbalancetoslipintoadeficitin2018.0%epreciati

6、on-1%Inflationpickingup:2018willbeayearoftwohalvesasweexpectd-0.6%inflationwillpickupin1H18andpeakaround5.5%inJun-18(largelyRWINRIDRKSGDZARRUBCNYTHBMYRBRLduetobaseeffect),andthereaftertrendlower.Onanannualbasis,weSource:Bloomberg,MacquarieResearch,January2018expectinflationtoaverage4.5%inFY19vs.

7、3.6%inFY18e.Externalbalancesheetstillremainsstrong:Whileatthemarginweexpectthecurrentaccountdeficitwillwiden,theoverallstrengthoftheexternalbalancesheetisstillmaintained,withFXreservestrackingatUS$411bn,importcoverat1